Guidelines for Islamic Modes of Finance, SBP

6 general covenants of the client the client

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6. GENERAL COVENANTS OF THE CLIENT The Client undertakes to the Institution that the Client shall: a) promptly give notice to the Institution of any change in the information disclosed on the Client Information Form. b) render the Management Services with due care and all reasonable commercial diligence expected of an experienced businessman to ensure the success of the Project according to the description of the Project Information Form and the Cash Flow and Revenue Projection. c) tutilize the Project assets exclusively for purposes of the file:///C|/Documents and Settings/Administrator/D...nes for Islamic Modes by SBP/mudaraba finance.htm (3 of 8) [2/24/2008 12:04:28 AM]
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State Bank of Pakistan - The Central Bank Project as specified in the Cash Flow and Revenue Projection. d) disburse all funds for the purpose of the Project only through the Account by cheque or transfer against proper supporting invoices maintained by the Client but available for inspection by the Institution or its agents. e) collect all receivables from third parties arising from the Project or the transfer of Project assets or other documents requiring payment from third parties directly to the Account. f) maintain all Project assets in the name of the Client, but physically segregated from other assets of the Client and free and clear of all liens and encumbrances except those in favour of the Institution. g) submit the following to the Institution, prepared according to the instructions of the Institution: (i) A cash flow and revenue statement of the Project for the previous quarter, with a clear explanation of each variation from the Cash Flow and Revenue Projection, within 30 days of the close of each quarter. (ii) A balance sheet and income statement of the Client prepared in accordance with principles utilized in the Client Financials consistently applied. The annual balance sheet and income statement shall be audited by an independent firm of accountants approved by the Institution, and audited documents shall be presented to the Institution within 120 days of the close of the Client s accounting year. h) maintain true and correct books of account relating to the Project together with all invoices, records contracts and all other documentation. i) supply to the Institution any information, material or document relating to the Project or to Client s financial status, and grant access to the Institution or its agents to all books and relating to the Project and to the Client s financial statements. j) immediately disclose in writing to the Institution any business factors of which the Client becomes aware and which might adversely affect the success of the Project. k) not effect directly or indirectly any transaction on behalf of the Project in which the Client or any family member of the Client or any shareholder of the Client, if a corporation, is interested directly or indirectly without consent of the Institution.
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